VAT Registered.. corporation tax?

[Liamh121]

Hi guys,
Have just set up my first business and registered for voluntary VAT. I just wondered if I am also required to still pay the same rate of corporation tax as I would before I was registered as VAT - or does the 20% VAT cover the corporation tax?

Thanks,

Liam

 

[millers666]

Hi liam,

The rate at which you pay corporation tax is determined by the taxable profit of the business.

Being VAT regustered will not reduce the rate at which you pay corporation tax.

 

[elaine@cheapaccounting]

Vat is 20% and corporation tax rate for small business is also 20%.

They are two separate taxes.

The thing to remember with VAT is you act as a tax collector for HMRC - you charge vat on your sales and pay it to HMRC, you get charged vat on your purchases and can claim it back from HMRC.

In effect you pay over the surplus of vat on sales less vat on purchases or you get a refund if your vat on purchases are more than vat on sales.

However I would say that is that continues to be the case then it could well be the case that you may not be making a profit. (before someone pipes up this may not always be the case as it depends on vat status of sales)

Why did you decide to voluntary register?

I do hope that you are not selling to consumers as they cannot claim the vat back and this makes your sales price 20% more.

Good luck with your business.

 

[MyAccountantOnline]

....does the 20% VAT cover the corporation tax?

Hi Liam

No it doesnt.

Your company will have to pay Corporation tax on the profit it makes ie income less expenses, and being VAT registered these figures will exclude VAT.

 

[Liamh121]

Thanks a lot guys - such a nightmare. Can't believe there's no tax breaks of anything for start-ups!

 

[MyAccountantOnline]

Thanks a lot guys - such a nightmare. Can't believe there's no tax breaks of anything for start-ups!

No one said that

Get a good accountant and they should help you with lots of tax saving opportunities.

 

[elaine@cheapaccounting]

Can't believe there's no tax breaks of anything for start-ups!

There are no specific breaks for start up businesses but there are ways to organise your tax affairs
An accountant can help or have a look at our free guide to doing your accounts:

http://www.cheapaccounting.co.uk/free-guide-to-keeping-your-accounts.php

 

[Jeremiah@RHJ Accountants]

I would echo what Nicola has said get a good accountant and speak to them as there may be ways for you to save tax.

Good luck

Jeremiah Jordan
Smith Craven Chartered Accountants

 

[SBlundell]

Thanks a lot guys - such a nightmare. Can't believe there's no tax breaks of anything for start-ups!

Most businesses struggle in their first year or two resulting in taxable losses, which they then subsequently offset against the first taxable profits.

So you see, the Gov't very generously doesn't tax you until you make more profit than loss - what more tax break could you possibly want?

* - I hasten to add more taxable profit than tax losses